Low Friction and Invisible Spending

It’s by far the most interesting thing Apple has launched in a while, IMO and makes Apple a prominent player in fintech. Recall that great hardware is often simply a loss leader for the transactions it enables (think Kindle). Adoption may come slowly, but it will come. Anything removing friction from transactions will undoubtedly be a powerful force.

I bought a Coin (probably already extinct by the time you read) and love using apps live Cover and Uber to ‘invisibly’ make payments. Wealth managers and mutual funds have cashed in on this for years, where consumers don’t feel paying a percentage of assets in the same way they do in a typical commerce transaction.

However — these invisible payments also raise concerns. There is little doubt in my mind that decreased friction increases frequency (and probably size) of transactions. I’ve found myself on Amazon buying things I don’t really need simply because Amazon Prime make it so easy. I’m extremely fortunate that I can afford to make needless purchases here and there without repercussion, but I was also raised understanding the value of a dollar and thus have decent self-control and awareness over my spending.

The concern is that while invisible spending might make my life easier, it might also present a real challenge to folks in situations where every dollar matters or where impulse control is an issue.

Bored? A $2.99 game, song or movie is a click away. Hungry? Seamless web is so much easier than cooking (and so much more expensive). While many middle to lower income folks cannot afford the current iPhones supporting these payments, undoubtedly invisible spending is the future and will be pervasive.

For younger generations growing up in a world where they rarely see tangible dollars, I wonder what effect this will have? I may be dating myself, but I remember saving allowance money dollar by dollar and the feeling of pride in handing it over a counter to receive that coveted baseball card.

It also should make us ask: who ultimately bears the responsibility? Is the onus on us (the consumer) to control our impulses, or do corporations also bear a responsibility to design products and payment processes in consumers’ best interests?

Sell-side analysis is dead, and Merrill Lynch is on record stating that investment research has been “Napster-ized.” In 2007, DealBook explained how Merrill Lynch planned to disallow non-clients from accessing